Car insurance fraud: what could be the consequences?
Car insurance fraud involves intentionally deceiving your car insurance provider. For example, by claiming more damage than you actually sustained. Or by staging a collision in order to receive compensation. Car insurance fraud can have serious consequences. We explain it here.
#1 Your auto insurance coverage is denied
If you commit insurance fraud, you run the risk of having your car insurance coverage denied. The insurer will then not pay out any compensation for your claim. In fact, the entire claim may be denied, even though only a small part of it involved fraud. Suppose you were rear-ended by another car. When reporting the car damage, you decide to also claim a number of old dents that you never had repaired. It seems relatively harmless, but if your car insurer discovers this, they may refuse to pay out your entire claim. Then you’ll end up with higher costs than if you hadn’t committed fraud.
# 2 Termination of your auto insurance.
Insurers take insurance fraud very seriously. They do not want to have someone who commits insurance fraud as a policyholder. That is why they almost always cancel a car insurance policy once insurance fraud has been established. Do you have any other active insurance policies with the same insurance company? In that case, the insurer will assess whether to cancel those as well. The reason your auto insurance and any other policies are being terminated is that you have breached the insurer’s trust. The insurer can no longer be certain that you will adhere to the agreed-upon terms of the policy and therefore almost always chooses to terminate all active policies.
#3 Registration of personal data in insurer fraud register
Is your car insurance company canceling your policy? If so, the insurer will store your information in its internal database. Many people confuse this with a so-called“blacklist.” However, there is no such thing as a blacklist. They do, however, record when and why they terminate a policy. This is to alert their own organization and keep it vigilant. In this way, they ensure that you cannot take out another policy as long as you are still registered as a fraudster. Internal records are not visible to other insurers
#4 Registration with CIS Foundation
CIS stands for Stichting Centraal Informatie Systeem (Central Information System Foundation ). Their database stores all insurance data that is important to share with insurers. If it is proven that you have committed insurance fraud involving your car, you will be registered in the CIS. Your auto insurer will then enter your personal information into the CIS database, along with the reason for the registration. Other insurers and authorized parties can view this information. The purpose of the database is to make potential risks manageable for insurers and to prevent fraud as much as possible.
If you have a CIS record for fraud, it’s often difficult to get new car insurance. Insurers always check the CIS database before accepting an insurance application. This allows them to quickly determine whether you have a record or not. If you have a CIS record, your only option is actually the insurance company De Vereende. De Vereende specializes in insuring special risks. Thanks to their broad underwriting policy, you can still take out insurance even with a CIS record.
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#5 Reporting to the Insurance Crime Control Center (CBV).
The CBV is a division within the DutchAssociation of Insurers dedicated to helping insurers combat fraud and other forms of insurance crime. Insurance fraud can also affect your career. If you apply for a job in the insurance industry or at a financial institution, there’s a good chance the company will consult the CBV. If they see a report of insurance fraud, they may reject your application: after all, it doesn’t make a very good impression.
#6 Financial implications
Of course, insurance fraud also has a number of financial consequences. First, you’ll have to pay a standard fine of €532. Second, you’ll be required to reimburse the insurer for the investigation costs incurred. An insurer must be able to prove that insurance fraud has actually occurred. That’s why they conduct an investigation when fraud is suspected. These investigation costs can sometimes be quite high, especially if an external investigation firm or an expert needs to be hired. Finally, taking out a new car insurance policy will be more expensive than usual. This means you’ll pay a higher premium than normal. You’ll also have to pay three months’ premium in advance and provide a security deposit to Vereende. Vereende can use this security deposit to offset any outstanding premiums if you’re late with your payments.
#7 Reporting to the police
The last consequence is immediately the most severe: the auto insurer may choose to report it to the police. In practice, however, this does not happen very often. Of course, reporting is a big step and is usually only done if the fraud amount is very high or if organized crime is involved.
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